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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (30071)	7/21/1998 8:31:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Joan, When you give a smart person a lot of money if he achieves X, Y and Z, the board cannot be surprised that he is aiming squarely at X,Y and Z and paying no attention whatsoever to the long term strategic position of this company. Why these people never think of what their incentive systems might achieve amazes me. The same thing happens in my business. Marketers are paid to flog a fund. Don't be surprised if the stories they tell and the techniques they use stretch ethics beyond the boundaries. In the big fund I managed, the dividend was earned throughout a month and reflected in the fund's price on the day it went ex. If I paid a 10 cents dividend, the fund price declined by 10 cents. The problem was, salesmen would sell it on the last day of the month making customers think they were getting something for nothing. "You get the whole month's dividend for only being in the fund one day." I had a cow when I found out, calling folks crooks and kicking dogs and stuff. Nobody ever told the customer that not only would he lose an equal amount on the fund's price, all things being equal, but he would get to pay taxes on his own money that we gave back to him. Yes, it was only one month that was a problem, and that wasn't much, but it bothered me a lot. It didn't bother a lot of brokers in the least. They were paid to kick the fund out the door and they used a trick if it worked. MB